Be aware - costs of ‘First Year VED’ and ‘Benefit-in-kind’ taxation will change on different dates

Dealers need to be aware that the costs of ‘First Year Vehicle Excise Duty (VED)’ and ‘Benefit-in-kind’ taxation will change on different dates.

Currently, DVLA only uses the old emission testing system NEDC’s CO2 values to create the source record, which is subsequently displayed on the V5C and used to calculate the relevant VED rate. From April 2020, DVLA will start using the WLTP CO2 values to calculate VED and BiK rates.

However, this change will be implemented on different dates for VED and BiK rates. WLTP figures will be used to source the CO2 values from 1 April 2020 for Vehicle Excise Duty (VED) rates and from 6 April 2020 for company car tax (BiK).

This issue could affect how much your fleet or retail customers will pay for their First Year VED as well as how much business users will pay in BiK personal taxation.

The effect of the changes will depend on the difference between the old NEDC and new WLTP emission rating figures:

  • If there is a large variation and the WLTP values are far higher than the current NEDC ones, dealers may want to tax the car early before the end of March 2020;
  • If the NEDC values are the same or lower than the WLTP ones, dealers may want to delay registering until April, but remember the VED date is 1 April, while the HMRC Benefit-in-kind change comes into effect from 6 April 2020.

Dealers should check that they are not unintentionally penalising any of their customers who are taking delivery of new cars around the end of March or early April